In the post-financial crisis era, perhaps the biggest question from a regulatory point of view is whether the reform efforts, symbolized by the Dodd-Frank Act, have solved the problem of too-big-to-fail banks. My sense has been that while the reform movement was right on in some ways, it perhaps did free the financial system from the need to bail out big banks should they get in trouble.

The former economist of the IMF returns to this theme with a pointed question: If Goldman Sachs (NYSE: GS) were to stumble badly, would the system allow it to fail like Lehman Brothers, or would it be bailed out again?

"The simple answer is that it is too big. Goldman's balance sheet fluctuates at around $900 billion; about one and a half times the size of Lehman when it failed. All sensible proposals to reduce the size of firms like Goldman--including the Brown-Kaufman amendment to Dodd-Frank financial legislation--have been defeated, and regulators show no interest in tackling Goldman's size directly."

A better question may be whether the reform movement has made it less likely that a superbank would stumble such that a bailout enters the discussion. That's where all the debate is.

Some would argue that various pay reforms have made it less likely that bank executives would pursue overly risky activity. Others would argue that higher capital ratios has achieved much the same. Still, some would add that derivatives, should clearinghouses ever become a reality, would be more safe and minimize systemic reverberations.

But given a Black Swan event, most would likely agree that the government, staring into an economic abyss, would not think twice about a bailout.

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